EU emissions trading system — auctioning regulation
Regulation (EU) No 1031/2010 on the timing, administration and other aspects of auctioning of greenhouse gas emission allowances
It sets out the rules to ensure that the procedure for allocating emission allowances within the European Union emissions trading system (EU ETS) is open, transparent, harmonised and non-discriminatory.
Auctioning has been the default method of allocating emission allowances under the EU ETS since phase 3 of the scheme began in 2013.
It is considered the most transparent method for allocating allowances and puts into practice the ‘polluter pays’ principle.
Businesses covered by the EU ETS have to buy an increasing proportion of allowances through auctions.
European Union (EU) Member States auction their allowances under rules set out in this regulation and the ETS directive 2003/87/EC (see summary).
The regulation covers emissions from aircraft as well as from stationary installations. It includes rules on a number of aspects of the auction process, namely the following.
The design of the auction. The type of auctioned products, auction format, bid submission or withdrawal and auction clearing price.
Products. Allowances are auctioned as standardised electronic contracts in the form of either 2-day spot or 5-day futures.
Format. Bids are submitted during a given bidding window without seeing bids submitted by others. Each successful bidder pays the same auction clearing price* for each allowance regardless of the price bid.
Auction calendar. The timing and frequency of auctions, the annual volume of auctioned allowances and the calendar for individual auctions.
Access to auctions. These rules set out who can bid in an auction, the process for submitting applications to bid and the procedure for suspending or revoking the right to bid.
Appointment of the auctioneer and their functions. From 2021, the European Investment Bank is the auctioneer for allowances for the Innovation Fund and Modernisation Fund.
Appointment of an auction platform. A common auction platform is nominated for up to 5 years by a joint procurement between the European Commission and the participating countries:
28 countries (25 Member States and three European Economic Area/European Free Trade Association countries) auction their allowances on the common auction platform;
the regulation includes rules for Member States opting to have their own auction platform.
Roles and responsibilities of the auction platform. The auction platform performs the auctions, post-trade payment of the auction proceeds, the transfer of allowances to successful bidders, reporting on transactions and auction surveillance.
Application & Background
It has applied since 19 November 2010.
For further information, see:
Auction clearing price. The volumes bid are added up, starting with the highest bid price. The price of the bid at which the sum of the volumes bid matches or exceeds the volume of allowances auctioned is the auction-clearing price.
Commission Regulation (EU) No 1031/2010 of 12 November 2010 on the timing, administration and other aspects of auctioning of greenhouse gas emission allowances pursuant to Directive 2003/87/EC of the European Parliament and of the Council establishing a scheme for greenhouse gas emission allowances trading within the Community (OJ L 302, 18.11.2010, pp. 1–41).
Successive amendments to Regulation (EU) No 1031/2010 have been incorporated in the original text. This consolidated version is of documentary value only.
Directive 2003/87/EC of the European Parliament and of the Council of 13 October 2003 establishing a scheme for greenhouse gas emission allowance trading within the Community and amending Council Directive 96/61/EC (OJ L 275, 25.10.2003, pp. 32–46).
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